Skip to content

README.md

Latest commit

 

History

History
93 lines (58 loc) · 4.16 KB

README.md

File metadata and controls

93 lines (58 loc) · 4.16 KB

Compound V3

Utilization

Github actions run hourly and send telegram message if there is a market with utilization above 99%. Python script code.

Governance

Internal timelock monitoring for queueing tx to Timelock contract on Mainnet.

This Timelock contract covers Mainnet and all other chains. Each protocol contract is controlled by the Timelock contract. For more info see the governance docs. Delay is 2 days.

Additionally, Github actions bot runs every hour and fetches queued proposals using Compound API: proposals.py

On-Chain Collateral Risk Monitoring

The script collateral.py reads collateral data directly from Compound V3 Comet contracts on-chain. It is run daily by Github actions.

Monitored Markets

Markets are configured in MARKETS_BY_CHAIN with their risk levels. Risk level defines the risk of Yearn strategy that is depositing into the market.

What is Monitored

For each market, the script fetches on-chain:

  • Number of collateral assets and their balances (numAssets, getAssetInfo, totalsCollateral)
  • Prices via Compound's price feeds (getPrice)
  • Total supply, borrow, and reserves (totalSupply, totalBorrow, getReserves)

It then checks:

  • Collateral Allocation Ratio: If any asset's allocation exceeds its risk-adjusted threshold.
  • Total Risk Level: If the weighted risk of all collateral exceeds the market's threshold.
  • Borrow/Supply Ratio: Alerts if above 95%.
  • Bad Debt: Alerts if getReserves() returns a negative value (protocol has more debt than assets).
  • Unknown Assets: Flags collateral assets not yet in the risk tier mapping.

Debt Supply Ratio

Alerts if the borrow/supply ratio exceeds 95% (DEBT_SUPPLY_RATIO in collateral.py).

Risk Levels

The overall risk level of a market is determined by the risk levels of its collateral assets. For details about each asset's risk tier, see SUPPLY_ASSETS. Markets are categorized by risk level, with Level 1 representing the safest configuration.

How to Add a New Market

  1. Add the market's Comet proxy address, name, and risk level to MARKETS_BY_CHAIN in collateral.py.
  2. Ensure each collateral asset is in SUPPLY_ASSETS in utils/assets.py. Unknown assets default to risk tier 5.

Market Risk Level

The total risk level of a market is the weighted sum of collateral asset risk tiers:

$$\text{Total Risk Level} = \sum_{i=1}^{n} (\text{Asset Risk Tier}_i \times \text{Allocation}_i)$$

Where:

  • Asset Risk Tier: A value between 1 and 5 (1 = lowest risk).
  • Allocation: The asset's share of total collateral value.

This is compared against thresholds defined in MAX_RISK_THRESHOLDS:

  • Risk Level 1: Maximum threshold of 1.10
  • Risk Level 2: Maximum threshold of 2.20
  • Risk Level 3: Maximum threshold of 3.30
  • Risk Level 4: Maximum threshold of 4.40
  • Risk Level 5: Maximum threshold of 5.00

Collateral Allocation Ratio

Each collateral asset has a maximum allocation based on its risk tier and the market's risk level.

Base allocation limits by risk tier (defined in ALLOCATION_TIERS):

  • Risk Tier 1: 100%
  • Risk Tier 2: 30%
  • Risk Tier 3: 10%
  • Risk Tier 4: 5%
  • Risk Tier 5: 1%

For markets with higher risk levels, thresholds become more permissive via get_market_allocation_threshold.

Examples:

  • A Risk-1 market accepts up to 30% in a Risk-2 asset.
  • A Risk-2 market accepts up to 100% in a Risk-2 asset.
  • A Risk-1 market accepts up to 10% in a Risk-3 asset.

Bad Debt

Bad debt is detected on-chain via getReserves(). When reserves go negative, the protocol has more outstanding borrows than available assets — this triggers an alert with the USD value of the shortfall.